Roman Sandals

August 8, 2008

Lean and Mean

Filed under: business, management, technology — Craig Lawton @ 3:00 pm

Lean manufacturing principles originated in Japan.

People are now applying them in IT: Lean software management, and also other aspects of IT such as Service Management.

In July 2007 it all looked so promising.

A year later what went wrong?

July 27, 2008

It’s really different this time…

Filed under: business, technology — Craig Lawton @ 11:28 am

The seems to be a common thread in the media that the IT industry is in for a downturn because the economy in general is struggling. I think it is different this time.

The last time IT struggled was at the end of the dot-com boom. The US dollar was really high, tech companies had massive inventories to clear and Cisco had been the biggest company in the world. The IT world had been set for a golden age which never arrived.

This time, the US dollar is low, tech companies are lean and in good shape having learnt their lessons, and surprise, surprise, the earnings of the big players are impressive and growing.

Intel, VMware, EMC, Apple, Microsoft, Google, all increased profits impressively. Some didn’t increase earnings enough and were “punished”, but this is clearly market sentiment. For example, VMware increased earnings by 40-ish% instead of 50-ish%, and their share price dropped. Strong international revenues especially are boosting results. SUN still struggles, but they were hit hardest by the dot-com era ending, and they still pull $4 billion in revenue each year.

Now big Australian corporate oligopolies, run by cosy, tech-ignorant boomers, have woken to the fact that they have under-invested in IT for the last decade, and have expensive legacy environments which are due for a big clear out. They have to spend money to make their environments lean; to make their businesses internationally competitive. And it’s a good time for CapEX in US dollars. Not only is IT gear very, very cheap compared to 8 years ago, each aussie dollar goes twice as far in US purchases as it once did.

May 23, 2008

St. George and the IT dragon

Filed under: business, musing — Craig Lawton @ 3:08 pm

Over the last few months I’ve read a couple articles in the AFR relating to IT spend in M&A activity.

It’s amazing to consider that about half of the business integration costs for the proposed merger between Westpac and St. George will be in IT (0.5 * $451,000,000).

Consider that the Commonwealth Bank is planning on spending $580,000,000 to re-engineer its aging platforms (to me this means cleaning out all the legacy crap), and NAB is looking at doing the same.

A merged Westpac/St. George would be $225,500,000 behind the eight-ball, before it could even contemplate a project of this scale.

Also, to make the merger more attractive, or because of uncertainty, either side could be tempted to put off required upgrades, lay off staff (possibly key staff), and run-down maintenance.

Accenture recently concluded a survey of 150 CIOs and found that poor IT integration was the leading cause of failure to meet the stated objectives of a merger or acquisition (38%).

It makes you wonder if this whole “IT thing” is going to collapse under the weight, and expense, of its own complexity!

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